When you receive a CP523 notice from the IRS, it means your installment agreement may soon be terminated. You have a limited time to get your payment plan reinstated before the IRS can begin using enforced collection actions, such as bank levies.
Take the following steps to get your installment agreement reinstated and avoid a payment plan termination.
Identify the Problem
Payment plans are usually terminated for one of the following reasons:
- You missed a monthly payment.
- You didn’t file a tax return when you should have.
- You incurred a new tax liability and didn’t pay it, whether from a tax return or estimated tax payment.
If you simply forgot to make a payment or file your return, correct the issue right away. You have 30 days before the IRS officially terminates your installment agreement.
If you need to adjust your payment plan or have a new tax liability you can’t pay, you’ll have to get more creative with your approach.
Renegotiating Your Payment Plan
You may be able to get a loan to pay off your new tax liability and get your payment plan reinstated. However, it’s possible that you already exhausted your credit options before negotiating your first installment agreement.
Fortunately, the IRS will sometimes allow you to add a new tax liability to your existing installment agreement. Your first preference would usually be to extend your repayment period so that you don’t have to increase your monthly payments.
This can work as long as the new tax liability isn’t too large. In that case, it will be more difficult to get the IRS to extend your repayment period, and you may have to consider increasing your monthly payments slightly.
Another option is to convert your agreement to a Direct Debit Installment Agreements. If you owe less than $50,000, the IRS will process your payment plan request in a more streamlined manner if you agree to pay by direct debit from your checking account.
Appeals
You have 30 days to either pay your new tax liability or figure out a new payment arrangement. If the IRS denies your new request, you can request an official appeal within this 30 day period, and the IRS won’t levy your assets while your appeal is taking place.
Contact a tax attorney for help renegotiating your existing IRS installment agreement and avoiding a payment plan termination.
The Gartzman Law Firm, P.C., offers tax settlement help for both federal and state tax debt. Use our contact form to request a consultation with an Atlanta tax resolution attorney.